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GoPro To Lay Off Employees After Low Sales Volume, Pays Millions for Severance Costs

By January 14, 2016 at 8:37 am
GoPro Hero3 (Photo : Andrew Burton/Getty Images News)

The company had to make a crucial move following a low revenue, cutting approximately 7 percent of its staff.

GoPro released a statement on Wednesday announcing their 2015 revenue results. The company stated that the expected $435 million revenue in the fourth quarter, and $1.6 billion for 2015, was not met due to low sales, The Business Insider reports.

"Fourth quarter revenue includes a $21 million reduction for price protection related charges resulting from the HERO4 Session repricing in December," the company stated on the website.

According to the analysts at Morgan Stanley, the launching of Hero4 was a flop as it immediately offered a low price soon after its release. They said the product may not have gained the attention of the target market, specifically the sports enthusiasts.

In a report by The Wall Street Journal, GoPro's shares slide down with 25 percent price of $11.02, leaving only less than $2 billion capital, which is about 90 percent decline from $93.85 price in Oct. 2014.

The Hero4 also did not perform as expected. The company made two price cut offers from $400 to $199.

"They totally misjudged the market on that one," said chief analyst Jan Dawson of Jackdaw Research. "The good news is it's really this one device they screwed up on. You could argue they'll go back to how they were doing before."

GoPro added that a $21 million charge is incurred following the reduction of price in December. Further, the company will have to pay about $5 million to $10 million for the severance costs brought about by cutting employees.

This year, GoPro plans to release their drone. They also started licensing shots on their cameras last year. However, none of actions is yet to gain a substantial return.

The company also announced the resignation of Zander Lurie as senior vice president. 

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